PREMIER PRODUCTS GROUP, INC. Item 3.02: Unregistered Sale of
On
· Registrant's transfer agent (Pacific Stock Transfer Company , hereafter the
"TA") did convert, even after Registrant requested the TA not to do so, a
Note of Valley High Mining Company , Registrant's wholly owned subsidiary
(hereafter, "VHMC") into common stock of Registrant. (For details of the
associated Delaware 251(g) reorganization, see Footnote below.)
· Very simply, despite the conversion notice by the Noteholders, shares in
Registrant should not have been issued. The Noteholders are owed money by
VHMC (the predecessor issuer). Registrant does not owe this money.
Accordingly, Registrant's shares should not be issued in satisfaction of
VHMC's liability.
· Upon discovering November 3, 2020 such issuance of Registrant's (the
parent's) common stock based on the subsidiary's Note, Registrant objected
(specifically advising the TA such conversions were taken without
Registrant's authorization). Registrant has taken actions at all times
subsequent to remediate the illegal issuance of the parent's shares. For
the reasons outlined in this 8-K and prior Current Reports, Registrant is
not the responsible party on its subsidiary's (VHMC's) Note.
· Indeed, the TA removed the restrictive legend on the Notes and the
Registrant's shares so issued improperly became "free trading"-again
without Registrant's authorization.
At all times subsequent, Registrant has worked to retract/reverse the TA's improper share issuance.
______________________
Footnote: For a detailed description of the reorganization, see Registrant's
Form 8-K filed
2
Those ongoing remedial actions include the following:
· On November 3, 2020 , Registrant emailed the TA to not convert the VHMC
Notes since VHMC's Notes were not assumed by Registrant in the
reorganization and, accordingly, VHMC's Notes are neither Registrant's
Notes (and/or liability). Such November email included a detailed
explanation of Holding Company Reorganization Section 251(g) under the
Delaware General Corporation Law. (As to that authority, see the Footnote
above and the February 27, 2018 Form 8-K re the Delaware 251(g)
Reorganization, the latter herein incorporated by reference.)
· Registrant issued its prior Current Reports in February as to this
unauthorized issuance of shares conveying the then current status of these
issues and committed to update such Current Reports…which it is here being
done. Note as well that the prior Current Reports had a detailed 6 bullet
"background" discussion (which is hereby incorporated by reference to the
foregoing February Current Reports)-and which concluded: "…[a]ccordingly,
Registrant's shares should not be issued in satisfaction of VHMC's
liability…."
· By letter dated February 22, 2021 , Registrant instructed the TA to reverse
the 78,530,130 share reservation involved in the Note conversion and, as
of this date, the TA has NOT done so. In fact, the TA responded in a
February 23, 2021 email acknowledging, among other matters, that it (i)
will not issue further Registrant shares to VHMC Noteholders and (ii) had
issued Registrant's common shares to VHMC Noteholders. (A copy of the
associated TA correspondence--to and from-was attached as Exhibit 10.1 to
the 8-K filed February 25 , 2021-which, again, is hereby incorporated by
reference.)
· In addition, management has written a February 24, 2021 demand letter to
all VHMC Noteholders who received the shares in the wrong entity (in other
words, the Registrant) seeking return of Registrant's common so issued. (A
copy of that letter to the individual Noteholders is attached as Exhibit
10.2 to the 8-K filed February 25, 2020
· As of the date of this Form 8-K, Registrant believes the following
information regarding the VHMC Noteholders and wrongly converted
Registrant common shares to be true:
· Noteholder 1: 21,468,620 Registrant common shares in the aggregate have
been issued. Based on two Schedules 13G filed, all of such shares were
issued, Noteholder 1 currently is not on Registrant's shareholder list
and perhaps such Registrant's shares have been sold.
· Noteholder 2: 12,127,129 Registrant common shares have been issued
relative to a VHMC Note originated January 2018 , Noteholder 2 currently
is not on Registrant's shareholder list and perhaps such Registrant's
shares have been sold.
· Noteholder 3: 12,127,129 Registrant common shares have been issued
relative to a VHMC Note originated January 2018 , Noteholder 3 currently
is not on Registrant's shareholder list, and perhaps such Registrant's
shares have been sold.
· Noteholder 4: 16,089,429 Registrant common shares have been issued
relative to a VHMC Note originated January 2018 , Noteholder 4 currently
is on Registrant's share-holder list and we presume such Registrant's
shares have not been sold.
· Noteholder 5: 2,500,000 Registrant common shares have been issued
relative to a VHMC Note originated October 2017 , Noteholder 5 currently
is on Registrant's share-holder list and we presume such Registrant's
shares have not been sold.
· Noteholder 6: 5,000,000 Registrant common shares have been issued
relative to a pre- 251(g) debt conversion, Noteholder 6 currently is
not on Registrant's shareholder list, and perhaps such Registrant's
shares have been sold.
3
· Noteholder 7: 5,000,000 of Registrant common shares were placed on STOP
by the Registrant on December 2, 2020 , Noteholder 7 currently is on
Registrant's shareholder list and we presume such Registrant's shares
have not been sold.
· Noteholder 8: 3,750,000 Registrant common shares have been issued
relative to a VHMC Note originated, Noteholder 8 currently is on
Registrant's shareholder list and we presume such Registrant's shares
have not been sold.
· Management and/or its counsel is in continuing discussions with the TA and
the affected Noteholders.
· Registrant, via an email date March 14, 2021 , has advised counsel for the
Noteholder that the shares improperly acquired should be returned to the
TA for cancellation and, if not, at minimum, the Noteholder(s) who hold or
held more than 5% of the common shares through this improper conversion
should file a "beneficial shareholder report" required under Section 13 of
the Securities Exchange Act of 1934 (the "'34Act").
· In response, one Noteholder (Noteholder 1 and the "Reporting Noteholder"):
· Filed a Schedule 13G Report as of December 17, 2020 pursuant to Section
13(g) relating to 15,468,820 shares of Registrant's shares. Registrant
does not have sufficient facts to agree with (i) the specifics of the
Schedule 13G, noting that it is not clear that the Reporting Noteholder
qualifies (must be a bank, a B-D or other "institutional investor" for
use of the "short form" Schedule 13G) and (ii) the number of shares
issued by the TA (21,468,620) to the Reporting Noteholder is well short
of the 15,468,820 the Noteholder Reports as of its December 17, 2020
Report Date.
· Even more confusing is that on or about March 11 , the Noteholder filed
an Amendment to the Schedule 13G arguing it was correcting a
"typographical error," instead advising that the Noteholder owned 0
shares (not the 15,468,820 or the TA reports respectively of
21,468,820).
· Noteholder 1 also have 78,531,380 common shares on reserve with the
Transfer Agent. Registrant sent numerous emails to Transfer Agent to
cancel the common shares from reserve, but as of report date, the
Registrant have been unsuccessful.
· To date, none of Noteholders has agreed to return the shares as requested
and counsel for the several parties continues to be in communication.
· It continues to be management's belief the free trading shares affected
Registrant's stock over the last 60 days. Moreover, management is in the
process of contacting the brokers who currently may have remaining
improperly issued Registrant common shares to stop selling and contacting
the VHMC Noteholders to return such improperly issued stock immediately.
Management reiterates that it will report more details of counsel's
finding as relevant information becomes available.
· Management also recognizes that the shares improperly issued--if allowed
to stand--were dilutive in character (and therefore could require
particulars as to Item 2.06, "Material Impairment") and, even though not
"sales" as defined, constituted the unregistered issuance of securities
(Item 3.02). Registrant seeks to have cancelled those improperly issued
shares and are working to so accomplish.
· Registrant, through its management and counsel, will take all judicious,
cost-effective remedial means to protect the interests of Registrant and
its shareholders. All courses of action are on the table. We will have
more to report on such remedial actions as events dictate.
While future events may impact Registrant's disclosures, please be advised that (as things stand today and as a result of our efforts due to reconciling records and verifying third party reports, 50,722,878 common shares have been presumably sold into the open market and 27,339,429 of Registrant's common shares are currently on Registrant's shareholder's list. Accordingly, man-agement of Registrant believes there that a cumulative 78,062,307 of Registrant's common shares have been issued improperly by the TA to VHMC Noteholders. We are working to get those improperly issued common shares of Registrant reconciled, returned, cancelled and/or sales proceeds remitted to Registrant. If we are successful in reversing this improper share issuance, the number of Registrant common shares would be the same before and after the improper issuance of Registrant's common to VHMC Noteholders. If we are not successful in the return of Registrant shares, their cancellation or the return of any sales proceeds from the improperly issued shares (as events dictate), disclosures so addressing will be the subject of a future Form 8-K.
4
© Edgar Online, source
